Debt settlement – The silver lining when you’re in debt mess

Debt settlement appears to be a great option for those who’re behind on their debt payments. You don’t need to pay your debts in full, and yet get rid of the liabilities.

Why the creditors accept a settlement offer?

A settlement mainly works since the creditors don’t want to lose out on the money that you owe them. If you successfully file a Chapter 7 bankruptcy, all of your unsecured debts will be discharged and the creditors will lose out on whatever they could have obtained from you. For this reason, most creditors are likely to accept a settlement offer. They will however negotiate and try to raise the amount as much as possible.

Which kind of debts can be settled?

Debt settlements works for the unsecured debts only. The secured debts are backed with the assets or properties. In that case, the creditors won’t be willing to settle at a lower amount, since they can just repossess the property and sell it off to obtain their money. Unsecured debts may include your credit card bills, medical bills, student loans etc.

Why debt settlement is time consuming?

Negotiation is the essence of debt settlement. You may try to settle your debt yourself or seek professional guidance like that of an attorney, who’ll represent you during settlement. Both ways, you’ll need to have patience and not rush into accepting a settlement offer. The creditors will try to extract as much money as possible, and consequently there will be a long negotiation till the time both the parties mutually agree to an amount.

When does hiring an attorney make sense?

Seeking professional guidance will evidently be helpful if you’re trying to settle your outstanding debt accounts.

They’re knowledgeable about the negotiation process and will be able to deal with the creditors more effectively. Besides, they will also be able to look after the legal formalities during the entire process. However, the settlement lawyers charge a portion of the amount that you save through the settlement. Thus, if you have a small debt amount, it doesn’t make sense to hire an attorney for the settlement process. Unless the debt amount is significant and you don’t save much through settlement, an attorney shouldn’t be hired. The fees of the attorney will eat up your savings, and the purpose of settlement will be lost.

Nevertheless, this doesn’t mean that you can’t settle your debts if you have a comparatively lower amount. You can build up your own defense, approach your creditors, and negotiate yourself to settle the debts at a reduced amount.

How to choose the best debt settlement attorney?

Finding a right debt settlement attorney is not a difficult task. However, you’ll need to put in your efforts before you place your trust on one. An attorney must be licensed in the state you’re in. Dig up the past records to check about his performance and success rate. Discuss about the fees that the attorney is going to charge for the entire settlement process, at the initial stage only, and don’t accept any vague replies about it. Check out the BBB list to see whether your attorney or his debt settlement firm is registered with the BBB and go through the rates and reviews.

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